O.C. one of costliest for corporate headquarters, expert says

The Boyd Company compared the costs of operating a corporate headquarters in 50 different metro areas.

Orange County is one of the most expensive U.S. locations for corporate headquarters at a time when companies are trying to burnish their reputations as penny pinchers, says a national site selection expert.

The Boyd Co., Princeton, N.J., site selection consultant, prepared the study for principal John Boyd Jr.'s presentation to clients in Irvine on June 14.

The study compares the cost of operating a corporate headquarters office in 50 U.S. and Canadian markets.

Orange County/Irvine ranks 8th highest with annual operating costs of $42.12 million, ahead of Los Angeles/Long Beach's $42.09 million. The study looked at costs for labor, electrical power, real estate and construction, property and sales taxes and travel to and from the location.

California has two other metro areas among the 10 costliest: San Jose at $46.56 million and San Francisco at $46.18 million. New York City is the most expensive in the nation at $47.17 million.

"With today's soft economy and credit crunch, comparative economics are ruling the corporate site selection process," the Boyd Company report says. "Historically off the table in corporate re-engineering and cost-cutting plans, the head office location (now) is as vulnerable for relocation and restructuring as any other company facility in today's cost-driven, global economy."

Boyd added, "Companies are rebranding themselves as fiscally responsible and the trend is toward states that don't have financial budget crises."

California cities do have some advantages over other areas that they ought to market better, he added.

"California has low property tax rates by national standards that could be better communicated to corporate America," he said. "Property tax savings are bigger than people realize. They directly affect the wallets of executives and their ability to recruit employees."

Although California communities have considered their competition for company locations to be neighboring states such as Nevada, Arizona and Utah, Boyd said their real competition today is in the Midwest.

"Several years ago when we sat down with clients, the first place they wanted to talk about was Las Vegas or Phoenix or Salt Lake City," he said. "Now they're looking to Indianapolis or Cincinnati that are centrally located to their markets on the east and west coasts."

Indianapolis, Ind., is the lowest priced U.S. metro area for headquarters at $35.65 million, beating out Charlotte, N.C., at $35.91 million. Four Canadian metro areas were even lower in cost. Halifax, Nova Scotia is lowest at $32.85 million.

Boyd said his company does these studies at the request of its clients, and the ones he will be talking to in Orange County this week wanted to know where they can save money by relocating their headquarters.

Cost alone is not the basis for moving corporate headquarters, the study noted. New York City still has more Fortune 500 company headquarters (40) than any other metro area even though it is the costliest location.

"New York City has given some very, very aggressive incentives (to keep corporations) and it always maintained its reputation as the center for financial services headquarters," Boyd said. "that may be changing. Panasonic and Prudential have announced moves and expansions to New Jersey."

Companies are paying more attention to politics in various locations and they know who the new crop of aggressively pro-business governors are, Boyd said. California Gov. Jerry Brown isn't one of them.

"I like Jerry Brown," Boyd said. "As the mayor of Oakland he was pro-business and there was hope (among California business executives) that he would compromise with the business community as governor. I'm not a political person but my clients are telling us he is a disappointment for job creators."

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